Urbandale Developer John Kline Tells Judge He Is 'Ashamed, Humbled' at Sentencing

John Kline will spend 2.5 years in federal prison and must pay $1.2 million in restitution because he and a business partner used development loans in an effort to salvage failing projects, the Des Moines Business Record reports.

“I’m ashamed, I’m humbled, I wish to hell we weren’t here right now,” Kline told U.S. District Court Chief Judge James Gritzner, according to the newspaper.

Kline also must pay nearly $1.2 million in restitution to banks and will serve five years probation after his release from a minimum security prison, according to a news release from the United States Attorney's Office.

Kline pleaded guilty to committing bank fraud on Jan. 11, 2013, in connection with a condominium development project on the south side of Des Moines, known as the Meadow Cove project, and a residential development project in Dallas County, known as the Heritage Hills project, federal authorities said.

He had been charged with diverting money borrowed for those projects to pay for other items and projects. A consortium of at least 12 Iowa and Missouri banks participated in loans to the projects. Kline’s co-defendant, Randal L. Walters, was sentenced by Chief Judge Gritzner in February of 2013, according to federal court authorities.

On Feb. 17, 2009, Kline filed for bankruptcy after a fire destroyed his million-dollar Urbandale home. No charges have been filed in that case and his wife, Michelle Kline, said she had no comment on the matter, the Business Record reported.

The Klines are responsible for the intentional setting of a fire that destroyed their Urbandale home in 2009, a civil lawsuit filed in 2010 says.

The lawsuit, filed in U.S. District Court by American Family Mutual Insurance Company, accuses Kline and his wife, Michelle, of concealing information about the nature and circumstances of the Feb. 9, 2009 fire in an attempt to fraudulently collect damages for the loss of the house and a 1964 Chevrolet Corvette under a homeowners and auto insurance policies.

The fire destroyed the 13,000-square-foot house located at 3536 129th St., Urbandale.